Household income falls as 46 million in poverty

WASHINGTON (MarketWatch) — There were 46.2 million Americans in poverty in 2011, as median household income decreased, according to a Census Bureau report released Wednesday illustrating the toll from ongoing labor-market weakness.

In 2010 there were 46.3 million in poverty. Meanwhile, the poverty rate remained high, ticking down to 15% in 2011 from 15.1% in 2010.

“Poverty remains very problematic,” said Harry Holzer, a public-policy professor at Georgetown University. “[The data] is not something to celebrate, but it’s nice that it didn’t go up.”

After rising for three years, neither the number of people in poverty nor the poverty rate was statistically different in 2011 from the prior year, Census said.

Meanwhile, real median household income decreased 1.5% to $50,054 in 2011, and a measure of income inequality increased on an annual basis for the first time since 1993, Census reported. Median income last year was down almost 9% from a recent peak in 1999, and is lower than when the recession began.

“It is clear that more work remains to rebuild economic security for our middle class,” said Rebecca Blank, the U.S. Commerce secretary, in a statement. “The fact that our wealthiest continue to see economic gains while the middle class continues to struggle to recover from the Great Recession underscores the fact we must enact policies that help rebuild our economy not from the top down, but from the middle out.”

Those without health insurance decreased to 48.6 million in 2011 from 50 million in 2010. Expanding government health-insurance for kids, and enacting the Affordable Care Act have led to more coverage, Blank said. For example, there was a significant drop in the uninsured rate for people between 19 and 25, as the ACA allows children up to 26 to stay on a parent’s plan.

The poverty report could have political implications.

The data will be a “difficult burden on the president’s path to re-election,” said Ron Christie, a Republican political strategist. “It is hard to overlook the fact that 1 in 7 Americans are at or below poverty,” he said.

In a statement Wednesday afternoon, Romney campaign spokeswoman Andrea Saul said the report “confirms that the American Dream remains out of reach for too many families ... Mitt Romney’s pro-growth agenda will revive our economy, spur job creation, lift families out of poverty, and create a better future for our country.”

Persistent jobs weakness taking a toll

Although the Great Recession officially ended in mid-2009, the number of unemployed remained high last year, reaching over 13 million in December, compared with almost 14 million at the beginning of 2011.

Surges in unemployment increase poverty as those who lose jobs take income hits, young workers face tough competition, and wage gains are slowed, said Lawrence Katz, an economist at Harvard University.

Exhausting unemployment-insurance benefits has also hurt many workers, he added.

“The persistence of high unemployment since the technical end of the Great Recession in 2009 further eroded wage growth and led many long-term unemployed to lose contact with the work force and to eventually exhaust unemployment benefits further shifting some into poverty,” Katz said.

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